U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[x]  ANNUAL REPORT PURSUANT  TO SECTION 13 OR 15 (d) OF  SECURITIES EXCHANGE ACT
     OF 1934

                     FOR THE FISCAL YEAR ENDED JULY 31, 1997

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d) OF  THE  SECURITIES
     EXCHANGE ACT OF 1934

                           Commission File No. 0-13078

                       LEADVILLE MINING AND MILLING CORP.
                 (Name of Small business issuer in its charter)

        State of Nevada                                          13-31805030
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

       76 Beaver Street
      New York, New York                                            10005
    (Address of principal                                         (Zip Code)
      executive offices)

     Issuer's telephone number: (212) 344-5158

Securities registered under Section 12(b) of the Exchange Act: none
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
                                                               value $.001 per 
                                                               share

Check mark whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. 
YES [X] NO [ ]

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulations S-B contained in this form, and no disclosure will be contained,  to
the best of the  registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year.  $2,063

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates  computed by  reference  to the  average  between the closing bid
($.78125) and asked  ($.84375) price of the issuer's Common Stock as of November
7, 1997 was  $10,073,670,  based upon the  average  between  the closing bid and
asked price ($.8125)  multiplied by the 12,398,363 shares of the issuer's Common
Stock held by  non-affiliates as of November 7, 1997. (In computing this number,
issuer has assumed all holders of greater  than 5% of the common  equity and all
directors and officers are affiliates of the issuer.)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 7, 1997: 14,380,900.

                DOCUMENTS INCORPORATED BY REFERENCE See Item 13.

         Transitional Small Business Disclosure Format: Yes [ ] No [ X ]


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                                   Form 10-KSB

PART I                          Table of Contents                          Page
------                          -----------------                          ----

Glossary                                                                   (iii)

Item 1.             Description of Business                                  1

Item 2.             Description of Properties                                2

Item 3.             Legal Proceedings                                        9

Item 4.             Submission of Matters to a Vote of                      10
                    Security Holders
Part II
-------

Item 5.             Market for Company's Common                             10
                    Equity and Related Stockholder Matters

Item 6.             Management's Discussion and Analysis of                 11
                    Financial Condition and Results of Operations

Item 7.             Financial Statements                                    14

Item 8.             Changes in and Disagreement with Accountants            14
                    on Accounting and Financial Disclosure

Part III
--------

Item 9.             Directors, Executive Officers, Promoters                14
                    and Control Persons; Compliance with
                    Section 16(a) of the Exchange Act.

Item 10.            Executive Compensation                                  16

Item 11.            Security Ownership of Certain Beneficial                17
                    Owners and Management

Item 12.            Certain Relationships and Related Transactions          18

Item 13.            Exhibits and Reports on Form 8-K                        19

Signatures                                                                  20

Supplemental Information                                                    21

Financial Statements                                                       F-1


                                       ii


<PAGE>


                           GLOSSARY OF TECHNICAL TERMS
                           ---------------------------

Backfilling:             Putting waste rock in an open stope.

Ball Mill:               Instrument which reduces rock to powder form.

Blanket Ore:             Ore  which  usually  lies  horizontal  in the form of a
                         sedimentary bed.

Brecchia Pipe:           A funnel  of  broken  rock  descending  into the  earth
                         (along  a  fault  line)  through   which   mineralizing
                         solutions may rise.

Contact Metamorphic
Type of Deposit:         Where minerals  result from ion exchange or replacement
                         between an intrusive igneous rock and a host rock.

CuSO4:                   Copper Sulfate.

Feeder Veins:            Small veins.

Floatation Plant:        Mechanical  system which  separates  valuable  minerals
                         from rock powder using chemical solutions.

Gravity Plant:           Mechanical  system which  separates  valuable  minerals
                         from  rock  powder  using  the  force  of  gravity  for
                         separation.

Hydrometallurgical
Plant:                   A smelter which reduces sulfide faults  converging from
                         different directions.

Leadville Dolomite:      Name  of  a  specific   limestone   bed  in  Leadville,
                         Colorado.

Leadville Silver
Gold Process:            Generally similar to the Sherrit Gordon process whereby
                         chemicals  are used to produce  oxides and  sulfates of
                         zinc.

Lode Claim:              Claim on which  mineral  is  found  underground;  i.e.,
                         vein.

Magnetic Anomaly:        A variation in the earth's magnetic field.

Magnetite Skarn:         The mineral  magnetite (iron Oxide) in combination with
                         quartz emplaced in limestone.

Major
Intrusive Center:        An area where large  funnels  exist and  through  which
                         large amounts of mineralizing fluids rose.

Massive
Polymetallic Ores:       Large dense mass of sulfide minerals containing several
                         metals.

MNSO4:                   Manganese Sulfate.


                                      iii


<PAGE>


Mineral Deposit or
Mineralized Material:    A   mineralized   underground   body  which  has   been
                         intersected  by sufficient  closely  spaced drill holes
                         and  or  underground  sampling  to  support  sufficient
                         tonnage  and  average  grade  of  metal(s)  to  warrant
                         further exploration-development work. This deposit does
                         not  qualify  as  a   commercially   minable  ore  body
                         (Reserves),  as prescribed under Commission  standards,
                         until a final and comprehensive economic, technical and
                         legal  feasibility study based upon the test results is
                         concluded.

Open Stope:              A mined area which remains as an open space.

OPT:                     Ounces per ton.

Patented Claim:          Privately owned mineral land.

PbSO4:                   Lead Sulfate.

Place Claim:             Claim on which  minerals are found in sand and gravel -
                         on surface.

Positive Ore:            Ore which is proven (same as proven).

Probable Ore:            Inferred  ore. Ore which is believed to exist,  but not
                         fully proven.

Proven Ore:              Minerals which are determined to be recoverable.

Replacement
Ore Body:                Mineral ore,  irregular  in form,  which is emplaced in
                         limestone.

Rhyolite                 An  igneous  rock  (rhyolite) which has  been fractured
Agglomerate:             (crushed) and recemented.

Sherrit                  Hydrometallurgical method of processing (smelting) zinc
Gordon Process:          concentrates into oxides and sulfates.

Shockwork Breccia:       Earth's  crust  broken by two or more sets of  parallel
                         faults converging from different directions.

Silica Stope:            Name of a mine location in the Hopemore mine.

Square Setting:          A system of  timbering a tunnel or opening  underground
                         to prevent cave-in.

Stockwork:               Ore,  when  not in  strata  or in  veins  but in  large
                         masses,  so as to be  worked  in  chambers  or in large
                         blocks.

Unpatented Claim:        Mineral land owned by the  government and rented for an
                         annual fee.

ZNSO4:                   Zinc Sulfate.


                                       iv


<PAGE>


                                     PART I
                                     ------


Item 1.  Description of Business

     Leadville  Mining and Milling Corp. (the "Company") was incorporated in the
state of Nevada in February 1982. The Company owns rights to property located in
the California Mining District, Lake County, Colorado and plans to engage in the
business of mining and milling gold and other minerals from its  properties.  At
present, there is no assurance that a commercially viable ore body exists in any
of the Company's  properties until further  systematic  underground  sampling or
core drilling is done, and a final  feasibility  study based upon the results is
concluded.  The future of the Company is dependent upon the Company's properties
producing  gold,  silver,  lead and zinc in  sufficient  quantities  so that the
Company will be a commercially viable entity. A description of the mining claims
owned by the Company is contained in "Item 2. Description of Properties."

     During the past year, the Company  completed the  re-building of the second
exit for the Hunter shaft, the headframe and the hoisting facility.

     At this time,  assuming that the Company is able to obtain adequate funding
(see  "Part II,  Item 6.  Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations-   Liquidity  and  Capital  Resources"),
management believes that the Company's Hopemore-Comstock, Hunter and Penn Groups
may be explored  with  positive  results.  If ore is  discovered  in  sufficient
quantity it could be processed at the Company's custom mill which is prepared to
process  ores at a rate of 180 tons per day;  expandable  to 300 tons per day as
required;  or  at  the  ASARCO  Black  Cloud  Mill  by  agreement  (the  "ASARCO
Agreement"). Management has signed an agreement whereby milling may be performed
by ASARCO Incorporated  ("ASARCO") at ASARCO's Black Cloud Unit. All activity at
the mine or mill would be  performed by persons  employed by the Company.  Since
September 1, 1997, the ASARCO  Agreement,  by its terms, is terminable by either
party upon 60 day's written notice. Notwithstanding the foregoing, the Agreement
shall not be extended  beyond June 30, 2000. See "Part II, Item 6.  Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations-Liquidity and Capital Resources."

     In the event that sufficient ore is discovered and processed,  concentrates
of metallic minerals containing gold (AU), silver (AG), Lead (PB), zinc (ZN) and
copper (CU) would be processed  (smeltered) at ASARCO's  smelter in East Helena,
Montana or, other possible smelters in the United States or Canada.

     The Mine Safety Health  Administration  requires that all underground mines
have at least two shafts that  communicate  with mine  operating  areas.  During
fiscal  1997,  the second exit of the Hunter  shaft was  completed.  The Company
commenced  exploration  of  potential  mineral  horizons on the  seventh  level,
including  gold-bearing  minerals in the "B-Zone" and other locations associated
with the #4 vein.  In the  Summer  of 1997,  long-hole  drilling  at the  B-Zone
location  resulted  in the  discovery  of an  area of  mineralization.  Minerals
located were discovered in the lower part of the Parting Quartzite in it's shaly
member.  Management believes,  based on initial long hole drilling results, that
mineralization  extends both upward 



                                       1
<PAGE>


into the Dyer dolomite and downward into the Manitou dolomite. Drilling resulted
in a  preliminary  average  grade of 1.29 oz. gold per ton in a small portion of
the mineralized zone.

     In the event that ore is discovered in sufficient quantity, it is estimated
that the cost to establish a viable mining and milling  operation  capable of up
to 180  tons  per  day  on a  continuous  and  long  term  basis,  will  require
approximately  $250,000  in capital.  These  funds would be applied  towards the
continued exploration for minerals in the B-zone and other locations.  There can
be no assurance that sufficient ore will be discovered,  that extraction will be
economically  feasible or that additional funding can be obtained,  if necessary
(see  "Part II,  Item 6.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations).

Competition

     While there is intense  competition  in the  acquisition  of viable  mining
properties,  the Company  already has the properties  that it intends to explore
and is not  currently  involved  in further  property  acquisition.  The Company
believes  that  there  is  no  material  competition  in  the  sale  of  mineral
concentrates  because  the  prices  for  mineral  concentrates  are  based  upon
standards  established  by the  commodities  exchange  (London  Metals  Exchange
market).

Employees

     As of July 31, 1997, the Company has 10 full time employees,  consisting of
two executive officers, six mine laborers and two administrative personnel.


Item 2.  Description of Properties

     The Company owns the following  mining claims,  all of which are located in
California Mining District, Lake County, Colorado.

                                 Patented Claims

                                                         Type         Percent Of
Name                     Claim No.      Acreage        Of Claim       Ownership
----                     ---------      -------        --------       ---------
Belle Placer              02778         120.860         Placer           62.5
Pueblo (et al [6])        12718          36.534         Lode             75.0
Chicago                   01295          10.020         Lode             50.0
New York                  01294          10.140         Lode             50.0
Mikado                    08015           9.250         Lode            100.0
Little Bertha             00504           8.380         Lode             3/8
Free America #2           01177           4.210         Lode             3/4
Emma                      00756           8.270         Lode             3/8
Colman                    09747           1.446         Lode            44/50
Little Galesburg          01176           6.000         Lode             1/8
Highland Chief            00429           2.097         Lode            100.0
Robert Burns              00538           9.859         Lode            100.0
Highland Mary             00539           6.600         Lode            100.0


                                       2


<PAGE>

President                 08942           6.900         Lode             1/16
J.G. Fraction             13251           1.727         Lode            31/96
Ballard                   00589           3.190         Lode            23/144


                                Unpatented Claims

                          Book/                         Type          Percent Of
Name                      Page No.      Acreage       Of Claim         Ownership
----                      --------      -------       --------         ---------

Columbine                 437/180         7.310         Lode            100.0
Judy                      437/181        17.990         Lode            100.0
New Comstock #1           433/191        20.661         Lode            100.0
New Comstock #2           433/191        20.661         Lode            100.0


     The Company additionally owns 20.73 acres located in the same area, namely,
the California Mining District, Lake County, Colorado on which its mill site for
processing of ore is located.

     The Company owns the  foregoing  claims as  indicated.  The Company has not
formed any  partnership  regarding  these claims,  nor are there any association
whereby  profits  or  expenses  are  to  be  shared.   The  claims  are  located
approximately  2.5 miles northeast of the town of Leadville,  Colorado by County
Road.  The  principal  acreage  forms a  contiguous  group and is  located  on a
prominent topographic feature known as Breece Hill. See below.

     The mill is a 180 ton per day  flotation  gravity  plant.  The  Company has
purchased an  additional  ball mill of 120 tons per day capacity  that is at the
mill site and ready to be installed.  The plant would have total capacity of 300
tons per day when the second mill has been put into place.

     The  plant is  situated  on a 20.73  acres  mill  site and has an  approved
tailings  disposal  location.  The plant has been pilot  tested and is ready for
production. All necessary permits to operate have been granted.

     Construction of the mill began in 1987 and was completed in August of 1989.
It was the Company's  intent to do  fee-milling  for other  companies  while the
federally-mandated  construction  of the  mine  second  exit  was  in  progress.
However,  the  recession  in the mining  industry,  which the Company  could not
predict,  and the  resulting  lower  metal  prices  essentially  eliminated  the
possibility  of custom  milling.  The mill is on a  stand-by  basis and has been
since its  completion.  The  Company  has  discussed  custom  milling  with many
potential  shippers of ore, but  transportation  costs from any mines not in the
Leadville District have proved to be prohibitive.  The Company  anticipates that
this mill will be able to process  both sulfide and oxide  minerals.  The ASARCO
mill will process  sulfide  minerals only.  (see "Part II, Item 6.  Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations-Liquidity  and Capital Resources").  The ASARCO agreement is still in
effect.  Should it terminate,  the Company believes that its own mill can handle
all minerals mined.



                                       3
<PAGE>


The Company has hired a mill-man  whose duties are to operate the Company's mill
plant.  Initial mill feed will be low-grade gold bearing tailings and base-metal
bearing exploratory ore. As the B-Zone is further evaluated, if drilling results
are favorable,  high grade ore from this location will be processed exclusively.
The mill has processed approximately 600 tons of material from old tailing piles
and recovered 20 to 30 ounces of gold,  with unknown amounts of silver and lead.
The mill is now in a condition  whereby it can efficiently  recover gold, silver
and lead from newly mined high grade ore.

History Hopemore Mine

     The Leadville mining district is located 100 miles west of Denver, Colorado
in the heart of the Rocky Mountains.  The weather is harsh with long winters and
short summers.

     The  Company's  properties  are within the high gold zone of the  Leadville
district  which was  dominated by the Ibex Mines on Breece  Hill.  The high gold
zone has produced  approximately  3 million ounces of gold. The average grade of
ore from the  Hopemore  area is not known.  On  adjacent  properties  a weighted
average of  siliceous  precious  metal ore  shipments  from the Garbutt Lode and
South Ibex Stockwork between 1913 and 1922 is 0.850 OPT Au, and 4.97 OPT Ag from
63,796 tons.

     Historically,  the Company's  properties were worked as two separate mining
areas, the Hopemore shaft in the Ibex area and the Penn Group area further west;
and the ores were not  concentrated by milling but were shipped  directly to the
Arkansas Valley Smelter in Leadville.

     Work by the  Company  started  in 1984  with  acquisition  of the  Comstock
Hopemore  Group of claims.  Retimbering  of the entire  Hopemore  shaft followed
along with establishment of the new seventh level, partial rehabilitation of the
other levels,  several raises, the fifth level connection with the Hunter shaft,
construction of a mill and the present retimbering of the Hunter escape shaft.

     The Hopemore shaft was worked as part of the Ibex mines until approximately
1902. The Hopemore shaft was sunk in 1907 to reach the seventh level of the Ibex
No. 4 mine.  Large  replacement  ore  bodies  in the  Leadville  dolomite  (Blue
limestone) lie on the hanging wall side  (southwest) of the Ibex No. 4 vein. The
ore is associated with a large magnetite skarn replacement body in the Leadville
dolomite.  The Leadville  dolomite on the footwall (east) side of the Ibex No. 4
vein was mined via the Hunter Shaft.

     Ground  conditions  in the  district  generally  do not allow open  stopes,
therefore,  square  setting  and  backfilling  with  waste of low  grade ore was
commonly  practiced.  When the large ore bodies of the Hopemore  were mined zinc
sulfide  ore was of no value.  High  zinc ore was  penalized  at the local  lead
smelter,  and it is believed  that much of the backfill may be high grade (+12%)
zinc mineralization.



                                       4
<PAGE>


Mineralized Material

Tons            Au in OPT      Ag in OPT        %PB         %ZN          %Cu
----            ---------      ---------        ---         ---          ---

121,200           0.178           8.63          3.98        12.2         0.35


[Donald  Wilson,  August 14, 1989,  Report on Properties  of Leadville  Mining &
Milling  Corp.  Donald  Wilson,  February,  1994,  Ore Reserves on Properties of
Leadville Mining & Milling Corp. Mr. Wilson is the President of the Company.]


                                     GEOLOGY

                               Exploration Targets

Hopemore Mine Exploration Target

     The Hopemore area has been mined from the Ibex No. 7 level.  The lower host
rocks of the Manitou and Dyer formations are thought to remain  unexplored.  The
mineralized  zones are commonly  controlled by steep sulfide  veins.  Four veins
have been  identified  which  could  feed  replacement  mineral  bodies in these
underlying  formations.  The potential  mineral  bodies are massive  sulfide and
could contain between 25,000 to 80,000 tons each of mineralized material. [Scott
Hazlitt Geological Report, Leadville Mining & Milling Properties,  January 1993,
Page 7].

     The  Company's  holdings in the Hopemore area are in a location that should
have good ground  preparation  for vein  deposits.  Vein  mineralization  is not
limited to specific  host rocks and may form minable  bodies of  mineralization.
The veins in the gold belt of the  Leadville  district are generally low in base
metals and higher in quartz  and  precious  metals.  [Scott  Hazlitt  Geological
Report,  Leadville  Mining & Milling  Properties,  January  1993,  Page 7].  The
expected  tonnage  from  veins  would  be 5,000 to  25,000  tons of  mineralized
material. [Emmons, et. al., 1927.Fig.98,99]

Penn Group Explorations Targets

     The targets in the Penn Group  area,  west of the  Hopemore,  are gold rich
magnetite  skarns,  massive  sulfide  replacement  deposits below or west or the
magnetite and vein deposits. The near surface gold rich magnetite skarn could be
over one million tons of mineralized material. [Scott Hazlitt Geological Report,
Leadville  Mining & Milling  Properties,  January 1993.  Emmons,  et.al.  (P104,
1927)] The deeper  massive  sulfide target could be in the range of one to +four
million  tons of  mineralized  material.  Vein type  deposits,  high in precious
metals are also a possibility under the magnetite deposits. The expected tonnage
from veins would be 5,000 to 25,000+ tons of mineralized  material.  [Thompson's
Magnetic  Anomaly Map (1990),  Johansing,  Plate 1,  Magnetic  Anamoly,  Emmons,
et.al. (P104, 1927)]

     The Penn Group including the area to the southwest, has not been thoroughly
prospected.  The  Magnetic  anomaly  map (1990) of the Breece  Hill area shows a
large zone with an 



                                       5
<PAGE>


anomalously high magnetic signature which management believes to be a large body
of magnetite skarn.  Although the magnetite skarn is a contact  metamorphic type
of deposit it is usually found near sulfide mineralization.

     In the adjacent mine,  massive sulfide  replacement  bodies are often found
next to  bodies  of  rhyolite  agglomerate,  which  is  also  known  locally  as
Fragmental  Porphyry.  The Fragmental  Porphyry is thought to form breccia pipes
that were formed  during the late stages of  mineralization  and were reamed out
centrally to form mineralizing  conduits. In numerous cases,  magnetite is found
peripheral to the massive sulfide deposits.  Pyrite veins in the magnetite often
carry  high gold  contents.  Within  the  Leadville  Mining  District  northeast
trending  veins are generally the best feeders for the massive  sulfide  blanket
deposits. The White Prince Vein which is mapped north of the Penn Group property
is  northeast  trending and on  Johnasing's  maps is  correlated  with the Pilot
Fault.

     The target zone would be either between the magnetite skarn and the breccia
pipe or under the magnetite  skarn.  Magnetite skarn cappings to massive sulfide
bodies are common in the general vicinity of the Comstock shaft.

Penn Group Mines

     The Penn Group lies northwest of the Hopemore and contains  magnetite skarn
and underlying sulfide minerals hosted by the Leadville dolomite.  Magnetite ore
was mined from  shallow  open cuts and was  shipped as  smelter  flux.  The ores
produced from underground workings contained a high gold and silver content. The
underground  workings  went to depths of 450 to 600 feet and focused on "Feeder"
veins and blanket ore in the lower Leadville formation.

     Mineralization  was mined along and to the east of the White Prince  fault.
The area west of the White  Prince fault is down thrown and was  prospected  but
not to sufficient depths to locate the favorable carbonate section.

Geology and Potential Reserves

     The ore deposits in the Leadville  district include precious and base metal
massive  sulfide veins and carbonate  hosted  deposits,  gold bearing  magnetite
skarns,  and gold rich veins. The major ore bodies are hosted in Paleozoic aged,
shelf carbonate rocks with a total thickness of 600 feet.

     These  sedimentary  rocks have been intruded by a series of sills and dikes
and faulted,  resulting in complex geology. The Company's properties are located
on Breece Hill which is a major intrusive  center and contain both gold,  silver
and base metal minerals.

Mineralized Material

Tons           Au in OPT      Ag in OPT        %PB          %ZN          %Cu
----           ---------      ---------        ---          ---          ---

121,200          0.178           8.63          3.98         12.2         0.35



                                       6
<PAGE>


80,000 tons of this total is based upon  representations  by Hopemore Mining Co.
at cessation of mining activities in 1913. Another 30,000 tons is represented by
the 640 "Zinc Stope" which is accessed by the 740 service raise and is above the
Hopemore sixth level (old Ibex 7th Level).  Other quantities of unknown size are
assigned to seven other areas for which dimensions are unknown.

     The B-Zone Mineral Bedded  structure  which is of unknown size and situated
in the Parting  Quartzite,  Manitou and Dyer  limestones  assayed 1.29 ounces of
gold and 5.00  ounces of  silver  per ton  across a width of 35 feet.  The total
thickness of the zone drilled of this bed is 17 feet. [Donald L. Wilson,  Report
on the  Properties of Leadville  Mining & Milling  Corp.  August 14, 1989 P. 25.
Scott Hazlitt,  Evaluation of the Properties of Leadville Mining & Milling.  Mr.
Wilson is the  President of the Company;  and the initial  results from the 1997
long hole drilling Program.]

                        Location Of Mineralized Material

   Tons     Area                    Au          Ag       Pb       Zn        Cu
   ----     ----                   ----        ----     ----     ----      ----

      #4 Vein 7 Level

   300  N 1/2 Block 428            0.14        8.4      2.65      4.40     0.55
   300  S 1/2 Block 428            0.40       16.0
   600  S 1/2 Block 441            0.11        9.2      1.95      7.90     1.30

      #4 Vein 6 Level

   100  N 1/2 Block 428            0.78       45.90     2.40      4.10     0.70
   400  N 1/2 Block 428            0.16       13.20     2.10      4.70     0.35

      #4 Vein (North Split)

   600  N 1/2 Block 428            0.15       15.10     2.35      3.30     0.40
   200  N 1/2 Block 428            0.36       23.70     2.10      4.10     0.46

      7 Level "B" Zone

 3,173      Replacement
            Minerals
            B-Zone                 1.29        5.00     0.50      0.50     0.97

      6 640 Stope Area

17,325  Blocks 440,
                441                0.092       5.80     3.95     16.20     0.40

      7 Level

 3,200  Block 475                  0.11        9.70     4.25     16.00     0.35



                                       7
<PAGE>


      6 Level

   500  Block 475                  0.26        4.30     2.50      6.00     0.30

      #4 Vein 5 Level

   300  S 1/2 Block 430 and
            N 1/2 Block
              441                  0.07        9.10     1.55      2.90     6.30
--------------------------------------------------------------------------------
   121,200  Total                  0.178       8.63     3.98     12.20     0.35

[Donald L. Wilson,  Report on the Properties of Leadville Mining & Milling Corp.
August 14, 1989. Mr. Wilson is the President of the Company.]


Weston Fault Massive Sulfide Exploration Targets

     The Weston fault forms the western boundary of the down-dropped block which
contains  the  deposits or the Black Cloud mine south and east of the  Company's
properties.  The  Hopemore-Hunter  workings are separated from the Penn Group by
the  Weston  fault  which,  has  had  a  complex  history  of  movement.   Early
compressional  tectonics are believed to have  resulted in minor over  thrusting
and drag folding,  possibly  similar to that along the Tucson Main Fault on Iron
Hill. Later normal faulting resulted in a near vertical  structure with the east
side down faulted.  These two episodes of movement are believed to have produced
two  strands of the  Western  Fault.  The ground  between the two strands of the
fault  should  have  undergone  good  ground  preparation  and may  contain  the
favorable carbonate section for massive sulfide blanket  mineralization.  [Scott
Hazlitt Geological Report, Leadville Mining & Milling Properties,  January 1993,
Page 8].

Weston Fault Stockwork Breccia Exploration Targets

     Along the  southern  strike of the Weston fault zone,  intersecting  faults
have hosted stockwork  breccia zones that contain precious metals and are low in
sulfides.  The Antioch mine produced a silicious  gold ore contained in a broken
and  brecciated  porphyry  body  between  two  fault  strands.  Another  similar
stockwork  breccia zone is known as the South Ibex  stockwork  or Capital  stope
that contained  approximately  250,000 tons of ore. There are two strands of the
Weston fault on the Company's  property.  The strike  length  controlled is from
1,400-1,600 feet. [Scott Hazlitt Geological  Report,  Leadville Mining & Milling
Properties, January 1993, Page 9]

     Management believes that stockwork mineralization along the intersection of
the Ibex No. 4 vein and the Weston fault is a good target  [Thompson's  Magnetic
Anomaly Map (1990),  Johansing,  Page 9]. The stockwork  mineralization could be
hosted by  porphyries  and could range in size from  50,000 to 500,000+  tons of
mineralized material. [Scott Hazlitt,  Evaluation of the Properties of Leadville
Mining & Milling  Corp.,  January  1993.  Chapman and  Stevens,  1929,  Colorado
Mineral Survey;  Leadville District and Adjoining  Territory.] Several veins 



                                       8
<PAGE>


may intersect  the Weston fault and more than one stockwork  body on each strand
of the fault is a possibility [Scott Hazlitt Geological Report, Leadville Mining
& Milling Properties, January 1993, Page 9].

Planned Exploration

     An  exploration  program  has been  underway  which  consists of drilling a
number of mineral  targets in the B-Zone of the  Hopemore  area.  Other  planned
targets for fiscal 1998 are listed below:

     A)   The   Hopemore-Hunter   mine  area  exploration  for  massive  sulfide
          replacement  deposits and vein deposits in near previously mined areas
          or in the underlying carbonate hosts.

     B)   Stockwork  breccia  deposits near vein  intersections  with the Weston
          Fault.

     C)   Massive sulfide replacement targets along the footwall or eastern side
          of the Weston Fault.

     D)   Replacement  targets  along the hanging  wall,  or western side of the
          Weston Fault.

     E)   The Penn Group area magnetite-gold and massive sulfide replacement and
          vein targets.

     F)   The magnetic  anomaly  which  extends to the west and southwest of the
          Penn Group-new magnetite-gold and massive sulfide mineralization.  The
          area between the breccia pipe (rhyolite agglomerate) and the west side
          of the magnetic anomaly- massive sulfide mineralization.

[Scott Hazlitt Geological Report, Leadville Mining & Milling Properties, January
1993,  Pages 9-10;  Thompson's  Magnetic  Anomaly Map (1990),  Johansing,  Pages
5-12].

     Long hole and core drilling will continue on the B-Zone  location on levels
5, 6, 7, 8 to determine the magnitude and shape of this mineral  structure.  The
Weston  Fault and #4 vein  juncture  also  will be  probed  by  tunnel  and core
drilling.  The estimated cost of this exploration is $141,000 and time required,
assuming adequate funding,  will be approximately 12 months.  See "Part II, Item
6.  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations- Liquidity and Capital Resources."

Item 3.  Legal Proceedings

     The Company is not  presently a party to any material  litigation.  In June
1996,  the Company  commenced an action  against  Franklin  Consolidated  Mining
Company,  Inc.  ("Franklin") to recover certain funds advanced by the Company to
Franklin in connection with expenses related to shares office space. The Company
and Franklin entered into a settlement agreement in July 1996, pursuant to which
the Company  agreed to accept  $18,000 as full payment for funds due. As of July
31, 1997, the Company had received all $18,000 under the settlement agreement.


                                       9
<PAGE>


Item 4.  Submission of Matters to a Vote of Securityholders

     No matters were  submitted to a vote of the Company's  shareholders  during
the fourth quarter of fiscal 1997.


                                     PART II
                                     -------

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

     (a)  Marketing  Information  -- The  principal  U.S.  market  in which  the
Company's common shares (all of which are of one class,  $.0001 par value Common
Stock)  are  traded or will trade is in the  over-the-counter  market  (Bulletin
Board  Symbol:  "LMMI").  The  Company's  stock is not  traded  or quoted on any
Automated Quotation System.

     The following  table sets forth the range of high and low bid quotes of the
Company's  Common  Stock per quarter for the past two fiscal years and the first
quarter of fiscal 1998 as  reported by the OTC  Bulletin  Board  (which  reflect
inter-dealer prices without retail mark-up,  mark-down or commission and may not
necessary represent actual transactions).

                          MARKET PRICE OF COMMON STOCK

Quarter Ending                        High and Low Bid
--------------                        ----------------

October 31, 1997                    1.07            .75
July 31, 1997                       1.1875          .75
April 11, 1997 through
  April 30, 1997                    1.3125          .375
February 1, 1997  through
  April 10, 1997                     .115           .06
January 31, 1997*                    .135           .08
October 31, 1996*                    .16            .10

July 31, 1996*                       .15            .10
April 30, 1996*                      .19            .11
January 31, 1996*                    .205           .075
October 31, 1995*                    .11            .08

----------
* Prior to a reverse split of the Company's Common Stock on a one-for-ten  basis
effected on April 11, 1997.

     (b) Holders -- The  approximate  number of  recordholders  of the Company's
Common  Stock,  as of  November  3, 1997  amounts  to 1,517  inclusive  of those
brokerage firms and/or  clearing houses holding the Company's  common shares for
their  clientele  (with each such  brokerage  house and/or  clearing house being
considered  as one  holder).  The  aggregate  number of  shares of Common  Stock
outstanding is 14,831,680 as of November 3, 1997.



                                       10
<PAGE>


     (c)  Dividends -- The Company has not paid or declared any  dividends  upon
its Common  Stock since its  inception  and, by reason of its present  financial
status and its  contemplated  financial  requirements,  does not  contemplate or
anticipate paying any dividends upon its Common Stock in the foreseeable future.

Item 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

     Fiscal 1997 Compared to Fiscal 1996

     Results of Operations

     During the fiscal year ended July 31, 1997, the Company continued  activity
at its gold/silver/base  metal mining project in Colorado. The effort was mainly
concentrated on  rehabilitating  the second exit,  Hunter shaft and installing a
new hoist.  At the present time,  the Company has not received  revenue from its
operations although it has expended considerable sums for the development of its
proposed mining and milling operation. (See "Liquidity and Capital Resources").

     Completion of the Hunter shaft was followed by exploration of the B-Zone by
long  hole  drilling  on the  Hopemore  levels  5, 6, 7 and 8 and,  if  economic
minerals are discovered,  extraction will soon follow.  A cross-cut will also be
driven north from the 8th level to explore minerals believed associated with the
Weston fault #4 vein  juncture  where a possible,  large ore body may exist.  If
economic  minerals  eventually  are  discovered,  core  drilling  will follow to
determine size,  shape and grade of the discovery.  These  exploration  projects
will require  approximately  12 months  (after  funding) and cost  approximately
$177,250.

     The  Company  has  approximately   121,000  tons  of  mineralized  material
containing  specified amounts of gold, silver,  lead, zinc and copper.  Possible
drill target  potential as indicated  by Scott  Hazlett,  Consulting  Geologist,
ranges up to 5,000,000  tons of mineralized  material.  The Company to date, has
completed  partial  exploration  of the Hopemore 7th level by cross-cut,  raise,
drift, and core drill. Stopes, ore chutes, ore passes and loading facilities are
completed and operational. Assuming adequate funding, the Company is prepared to
enter into a development program and will, if sufficient mineralized material is
discovered and extraction is determined to be economically feasible, develop and
mine the property.

     If sufficient  ore is  discovered,  the Company would  commence  mining and
milling at a rate of up to 150 to 180 tons per day and  gradually  increase  the
tonnage as conditions  would allow.  It is understood that in order to realize a
mill capacity of 300 tons per day the Company  should  explore and develop a two
year supply of proven ore (225,000  tons).  In order to execute the  exploration
project, a capital investment of approximately $192,250 would be required.

     With regard to all estimates of mineral  tonnage,  further geologic work is
required before the Company can conclude that  commercially  viable ore deposits
exist.



                                       11
<PAGE>


     The Company  generated no revenues from operations  during the fiscal years
ended  July 31,  1997 and 1996.  There were de  minimis  non-operating  revenues
during  these  periods  of $2,063  and $960,  respectively.  Costs and  expenses
decreased by approximately  15.6% from fiscal 1996 to fiscal 1997. Mine expenses
increased  by  $80,581  (approximately  33.9%)  from  1996  ($237,560)  to  1997
($318,141).  The increase in mine expenses resulted primarily from expanded work
at the mine. Selling,  General and Administrative expenses decreased by $227,327
(approximately 32.0%) from 1996 ($709,707) to 1997 ($482,380) primarily due to a
decrease in the cost of raising capital. As a result, the Company's net loss for
1997 was $805,496,  which was $150,547  (approximately 15.7%) less than its 1996
loss of $956,043.

     Liquidity and Capital Resources

     As of July 31, 1997, the Company's current  liabilities  exceed its current
assets  by a ratio  of  approximately  1.6 to 1 and the  Company  had a  working
capital  deficiency  of $21,598.  Therefore,  the Company can only continue as a
going concern in the event that it obtains additional  capital.  As noted above,
management   anticipates   that  it  will  need  at  least  $972,250  to  become
commercially  operational on a reduced scale and begin generating  revenues from
operations.  To obtain  such  funding,  management  intends to raise  additional
capital through the sale of its securities and/or debt financing.

     Specific  plans to obtain  financing  for a full scale  mining and  milling
operation  will  most  likely  include  a  combination  of  one or  more  of the
following:

     1.   Private  placements  of  the  Company's  securities  to  institutions;
          private  individuals  and investment  groups.  During fiscal 1997, the
          Company  raised  approximately  $566,231  through  the sale of  common
          stock.  These  investments  have  enabled the Company to complete  the
          Hunter shaft, test the mill and do core drilling.

     2.   A working  arrangement  with a mining  company  pursuant  to which the
          Company would mine and the other company would mill,  smelt and market
          the products.  Under these  conditions,  the  Company's  cost would be
          concentrated on the mining effort only. The Company currently has such
          an agreement  with  ASARCO.  The ASARCO  agreement  ran for an initial
          two-year  term  and,  since   September  1,  1997,  the  Agreement  is
          cancelable by either party on 60 day's written notice. Notwithstanding
          the  foregoing,  the Agreement  would not extend beyond June 30, 2000.
          Pursuant to the Agreement, the Company would deliver metallic minerals
          to the ASARCO mill site six miles  southeast of  Leadville,  Colorado.
          The price  for the  material  would be based  upon the  London  Metals
          Exchange  market  price,  less certain  deductions  for  treatment and
          impurities. In the event the ASARCO Agreement is canceled, the Company
          believes that its mill has flotation capacity to process sulfide ores.



                                       12
<PAGE>



     Assuming  that the Company is able to obtain  funds from one or more of the
above sources,  planned activities over the next year, in order of priority, are
as follows:

<TABLE>
<CAPTION>
                                                            Estimated Time Required
                                                           to Complete (or Operating
                                                              Time - Production),
                  Activity                 Estimated Cost      Assuming Funding
                  --------                 --------------      ----------------
<S>                                           <C>                 <C>      
(a) Develop B-zone mineral structure
      in preparation for mining and
      tunnel to Hunter Shaft                  $144,000            12 Months

(b) Drive tunnel to Weston fault
      mineral structure - develop.             $33,250             6 Months

(c) Develop B-Zone minerals                    $15,000             1 Month
 
(d) Operate Mine & Mill                       $600,000             6 Months
</TABLE>

     Aside from the above planned activities, the Company's basic administrative
capital needs (e.g. rent, salaries,  utilities,  etc.) are approximately $15,000
per month.  Management  has been funding these basic  requirements  and hopes to
continue  to fund these  requirements  through  the  private  sale of its Common
Stock.  During the year ended July 31, 1997, the Company obtained  approximately
$566,231 from the private sale of Common Stock.

     There is no assurance  whatsoever that any of the Company's  proposed plans
to raise  capital and  otherwise  fund  operations  will prove  successful.  The
Company's  inability  to obtain  sufficient  funding  will  delay the  Company's
planned operations or, possibly, force the Company to go out of business.


Environmental Issues

     Management does not expect that  environmental  issues will have an adverse
material  effect on the  Company's  liquidity  or  earnings.  Before  any mining
development or mining  exploration or construction of milling  facilities  could
begin, it was necessary to meet all  environmental  requirements  and to satisfy
the regulatory  agencies in Colorado that the Company's proposed procedures fell
within the boundaries of sound environmental  practice. The Company is bonded to
insure  procedures  and  reclamation  of any areas  disturbed  by the  Company's
activities.  Recently,  the Mined Land Reclamation  Board reviewed the Company's
permit and bond and determined  that an increase in the bond was  necessary.  At
that time, the Company placed an additional  $6,000 in escrow against any future
indemnity.

     Part of the  Leadville  Mining  District  was  declared a  Superfund  site.
Several  mining  companies  and one  individual  were  declared  defendants in a
possible lawsuit.  The Company was not named a defendant or Possible Responsible
Party.  The  Company  did  respond  in full  detail to a  lengthy  questionnaire
prepared by the Environmental  Protection Agency ("EPA") 



                                       13
<PAGE>


regarding  the Company's  proposed  procedures  and past  activities in November
1990. No further comments or questions have been initiated by the EPA.

     The Company does include in all its internal revenue and cost projections a
certain amount for environmental and reclamation costs on an ongoing basis. This
amount is determined at a fixed amount of $1.50 per ton of material to be milled
on a continual, ongoing basis to provide for further tailings disposal sites and
to reclaim the  tailings  disposal  sites in use.  At this time,  there does not
appear to be any environmental  costs to be incurred by the Company beyond those
already   addressed  above.  No  assurance  can  be  given  that   environmental
regulations  will not be changed in a manner  that  would  adversely  affect the
Company's planned operations.

Item 7.  Financial Statements.

     For  the  Financial  Statements  required  by  Item  7  see  the  Financial
Statements included elsewhere in this Form 10-KSB.

Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosures.

     There  have been no  changes  in or  disagreements  with  accountants  with
respect to accounting and/or financial disclosure.


<PAGE>



                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)


                          INDEX TO FINANCIAL STATEMENTS
                       FILED WITH THE ANNUAL REPORT OF THE
                             COMPANY ON FORM 10-KSB



                        FOR THE YEAR ENDED JULY 31, 1997



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

BALANCE SHEET AS OF JULY 31, 1997, LEADVILLE MINING AND MILLING CORP.

STATEMENT OF OPERATIONS FOR THE YEARS ENDED JULY 31, 1997 AND JULY 31, 1996, AND
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997, LEADVILLE MINING
AND MILLING CORP.

STATEMENT OF CHANGES IN  STOCKHOLDERS'  EQUITY FOR THE PERIOD SEPTEMBER 17, 1982
(INCEPTION) TO JULY 31, 1997, LEADVILLE MINING AND MILLING CORP.

STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JULY 31, 1997 AND JULY 31, 1996, AND
FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997, LEADVILLE MINING
AND MILLING CORP.

NOTES TO FINANCIAL STATEMENTS


                         ------------------------------


Other  schedules not submitted are omitted,  because the information is included
elsewhere in the financial  statements or the notes  thereto,  or the conditions
requiring the filing of these schedules are not applicable.

As to certain matters,  the financial  statements  herein differ in presentation
from,  and include  data which are not  contained  in, the  Company's  published
financial statements to stockholders.  Such presentation and additional data are
submitted  solely for the purpose of complying  with the  applicable  accounting
requirements of Form 10-KSB and Regulation S-X.


<PAGE>


WG  Wolinetz, Gottlieb & Lafazan, P.C.                    5 North Village Avenue
&L  ----------------------------------                          Rockville Centre
       Certified Public Accountants                               New York 11570
                                                                  (516) 536-0770
                                                             Fax: (516) 536-5753


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------

To The Board of Directors & Shareholders of
Leadville Mining and Milling Corp.

We have audited the  accompanying  balance sheet of Leadville Mining and Milling
Corp. (A  Development  Stage  Enterprise)  as of July 31, 1997,  and the related
statements of  operations,  changes in  stockholders'  equity and cash flows for
each of the two  years in the  period  ended  July 31,  1997 and for the  period
September 17, 1982 (Inception) to July 31, 1997. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Leadville Mining and Milling
Corp. (A  Development  Stage  Enterprise) as of July 31, 1997 and the results of
its  operations and its cash flows for each of the two years in the period ended
July 31, 1997 and for the period September 17, 1982 (Inception) to July 31, 1997
in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements, the Company has incurred recurring losses through July 31,
1997 and has a working  capital  deficiency  of  $21,598  at July 31,  1997 that
raises  substantial  doubt about its  ability to  continue  as a going  concern.
Management's  plans in regard to these  matters  are  described  in Note 10. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


                                          /s/ WOLINETZ, GOTTLIEB & LAFAZAN, P.C.
                                              WOLINETZ, GOTTLIEB & LAFAZAN, P.C.


Rockville Centre, New York
October 16, 1997


                                       F-1


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                  BALANCE SHEET
                                  JULY 31, 1997


                                           ASSETS

Current Assets:
  Cash                                                              $    27,510
  Loans Receivable                                                        5,826
  Other Current Assets                                                      976
                                                                    -----------
     Total Current Assets                                                34,312

Property and Equipment (Net of
  Accumulated Depreciation of $344,832)                               1,360,819
                                                                    -----------

Other Assets:
  Mining Reclamation Bonds                                               11,000
  Security Deposit                                                        3,667
                                                                    -----------
   Total Other Assets                                                    14,667
                                                                    -----------
Total Assets                                                        $ 1,409,798
                                                                    ===========

                            LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accrued Expenses and Taxes                                        $    55,910
                                                                    -----------

Commitments and Contingencies

Stockholders' Equity:
  Common Stock, Par Value $.001 Per Share;
    Authorized 150,000,000 shares; Issued and
    Outstanding 14,380,900 Shares                                        14,381
  Capital Paid In Excess of Par Value                                 6,847,723
  Deficit Accumulated in the Development Stage                       (5,508,216)
                                                                    -----------
     Total Stockholders' Equity                                       1,353,888
                                                                    -----------
Total Liabilities and Stockholders' Equity                          $ 1,409,798
                                                                    ===========



The accompany notes are an integral part of the financial statements.


                                       F-2


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF OPERATIONS


                                                                  
                                                                For The Period
                                       For The Year Ended     September 17, 1982
                                              July 31,           (Inception)  
                                   --------------------------        To
                                       1997            1996     July 31, 1997
                                   -----------    -----------   -------------
Revenues:
  Interest Income                  $       840    $       960    $   708,234
  Miscellaneous                          1,223           --           24,706
                                   -----------    -----------    -----------

    Total Revenues                       2,063            960        732,940
                                   -----------    -----------    -----------

Costs and Expenses:
  Mine Expenses                        318,141        237,560      1,723,713
  Selling, General and
    Administrative Expenses            482,380        709,707      4,036,245
  Depreciation                           6,350          8,344        344,832
  Loss on Write-Off of
    Investment                            --             --           10,000
  Loss on Joint Venture                   --             --          101,700
                                   -----------    -----------    -----------

  Total Costs and
     Expenses                          806,871        955,611      6,216,490
                                   -----------    -----------    -----------

Loss Before Provision
  For Income Taxes                    (804,808)      (954,651)    (5,483,550)

Provision For Income
  Taxes                                    688          1,392         24,666
                                   -----------    -----------    -----------

Net Loss                           $  (805,496)   $  (956,043)   $(5,508,216)
                                   ===========    ===========    ===========


Net Loss Per Share                 $      (.06)   $      (.08)
                                   ===========    ===========

Average Common Shares Outstanding   13,535,361     11,858,172
                                   ===========    ===========


The accompanying notes are an integral part of the financial statements.


                                       F-3


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
         FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997

<TABLE>
<CAPTION>
                                                                                                        Deficit
                                                                                                      Accumulated
                                                           Common Stock              Capital Paid       In The
                                                    ---------------------------      In Excess of     Development
                                                      Shares           Amount         Par Value          Stage             Total
                                                    ----------       ----------       ----------       ----------        ----------
<S>                                                  <C>             <C>              <C>                 <C>            <C>      
Balance
  September 17, 1982
  (Inception)                                              -0-       $       -0-      $      -0-      $       -0-         $      -0-

Initial Cash
  Officers - At $.001 Per Share                      1,575,000            1,575             --               --               1,575

  Other Investors -
    At $.001 Per Share                               1,045,000            1,045             --               --               1,045

Initial - Mining Claims                                   --
  Officer - At $.002 Per Share                         875,000              875              759             --               1,634

Common Stock Issued For:
  Cash At $.50 Per Share                               300,000              300          149,700             --             150,000

Net Loss                                                  --               --               --             (8,486)           (8,486)
                                                    ----------       ----------       ----------       ----------        ----------

Balance - July 31, 1983                              3,795,000            3,795          150,459           (8,486)          145,768

Common Stock Issued For:
  Cash Pursuant to Initial Offering
  At $1.50 Per Share, Net of
  Offering Costs of $408,763                         1,754,741            1,755        2,221,594             --           2,223,349

Net Income                                                --               --               --             48,890            48,890
                                                    ----------       ----------       ----------       ----------        ----------

Balance - July 31, 1984                              5,549,741            5,550        2,372,053           40,404         2,418,007

Net Income                                                --               --               --             18,486            18,486
                                                    ----------       ----------       ----------       ----------        ----------

Balance - July 31, 1985                              5,549,741            5,550        2,372,053           58,890         2,436,493

Common Stock Issued For:
  Mineral Lease At $1.00 Per Share                         100             --                100             --                 100

Net Income                                                --               --               --              4,597             4,597
                                                    ----------       ----------       ----------       ----------        ----------

Balance - July 31, 1986                              5,549,841            5,550        2,372,153           63,487         2,441,190
</TABLE>



The accompanying notes are an integral part of the financial statements.


                                       F-4


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
         FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997

<TABLE>
<CAPTION>
                                                                                                       Deficit
                                                                                                     Accumulated
                                                      Common Stock               Capital Paid          In The
                                              -----------------------------      In Excess of        Development
                                                Shares             Amount          Par Value            Stage              Total
                                              -----------       -----------       -----------        -----------        -----------
<S>                                           <C>               <C>               <C>                <C>                <C>         
Net Loss                                             --         $      --         $      --          $  (187,773)       $  (187,773)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1987                         5,549,841             5,550         2,372,153           (124,286)         2,253,417

Common Stock Issued For:
  Services Rendered At
    $1.00 Per Share                                92,000                92            91,908               --               92,000

Net Loss                                             --                --                --             (328,842)          (328,842)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1988                         5,641,841             5,642         2,464,061           (453,128)         2,016,575

Net Loss                                             --                --                --             (379,852)          (379,852)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1989                         5,641,841             5,642         2,464,061           (832,980)         1,636,723

Common Stock Issued For:
  Cash:
    At $.70 Per Share                             269,060               269           194,219               --              194,488
    At $.50 Per Share                             387,033               387           199,443               --              199,830
  Services:
    At $.50 Per Share                              68,282                68            34,073               --               34,141
  Commissions:
    At $.70 Per Share                              15,000                15               (15)              --                 --

Commissions Paid                                     --                --              (2,100)              --               (2,100)

Net Loss                                             --                --                --             (529,676)          (529,676)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1990                         6,381,216             6,381         2,889,681         (1,362,656)         1,533,406

Common Stock Issued For:
  Cash At $.60 Per Share                          318,400               319           180,954               --              181,273

Net Loss                                             --                --                --             (356,874)          (356,874)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1991                         6,699,616             6,700         3,070,635         (1,719,530)         1,357,805
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                       F-5


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
         FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997

<TABLE>
<CAPTION>
                                                                                                       Deficit
                                                                                                     Accumulated
                                                     Common Stock                Capital Paid          In The
                                              -----------------------------      In Excess of        Development
                                                 Shares            Amount          Par Value            Stage              Total
                                              -----------       -----------       -----------        -----------        -----------
<S>                                             <C>             <C>               <C>                <C>                <C>        
Common Stock Issued For:
  Cash:
    At $.30 Per Share                             114,917       $       115       $    34,303        $      --          $    34,418
    At $.50 Per Share                               2,000                 2               998               --                1,000
    At $.60 Per Share                              22,867                23            13,698               --               13,721
    At $.70 Per Share                              10,000                10             6,990               --                7,000
    At $.80 Per Share                               6,250                 6             4,994               --                5,000
    At $.90 Per Share                               5,444                 5             4,895               --                4,900
  Services:
    At $.32 Per Share                              39,360                39            12,561               --               12,600
    At $.50 Per Share                              92,353                93            46,084               --               46,177
  Exercise of Options:
    At $.50 Per Share By
      Related Party                               100,000               100            49,900               --               50,000

Net Loss                                             --                --                --             (307,477)          (307,477)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1992                         7,092,807             7,093         3,245,058         (2,027,007)         1,225,144

Common Stock Issued For:
  Cash:
    At $.30 Per Share                             176,057       $       176       $    51,503        $      --          $    51,679
    At $.50 Per Share                             140,000               140            69,964               --               70,104
    At $.60 Per Share                              10,000                10             5,990               --                6,000
    At $.70 Per Share                              17,000                17            11,983               --               12,000
    At $1.00 Per Share                             50,000                50            49,950               --               50,000
  Services:
    At $.50 Per Share                             495,556               496           272,504               --              273,000
  Commissions:
    At $.50 Per Share                              20,220                20               (20)              --                 --

Commissions Paid                                     --                --              (1,500)              --               (1,500)

Net Loss                                             --                --                --             (626,958)          (626,958)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1993                         8,001,640             8,002         3,705,432         (2,653,965)         1,059,469
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                       F-6


<PAGE>



                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
         FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997

<TABLE>
<CAPTION>
                                                                                                        Deficit
                                                                                                      Accumulated
                                                        Common Stock                Capital Paid        In The
                                                 -----------------------------      In Excess of      Development
                                                    Shares            Amount          Par Value          Stage              Total
                                                  -----------      -----------      -----------       -----------       -----------
<S>                                               <C>              <C>              <C>               <C>               <C>        
Common Stock Issued For:
  Cash:
    At $.30 Per Share                                 149,330      $       150      $    43,489       $      --         $    43,639
    At $.50 Per Share                                 377,205              377          189,894              --             190,271
Services:
    At $.30 Per Share                                 500,000              500          149,500              --             150,000
    At $.50 Per Share                                 130,000              130           71,287              --              71,417
    At $.50 Per Share
      By Related Party                                 56,000              156           77,844              --              78,000
    At $.70 Per Share                                   4,743                4            3,316              --               3,320
  Exercise of Options For Services:
    At $.50 Per Share                                  35,000               35           17,465              --              17,500
    At $.50 Per Share
     By Related Party                                 150,000              150           74,850              --              75,000

Net Loss                                                 --               --               --            (665,909)         (665,909)
                                                  -----------      -----------      -----------       -----------       -----------
Balance - July 31, 1994                             9,503,918            9,504        4,333,077        (3,319,874)        1,022,707

Common Stock Issued For:
  Cash:
    At $.30 Per Share                                 150,000      $       150      $    49,856       $      --         $    50,006
    At $.40 Per Share                                 288,200              288          115,215              --             115,503
    At $.50 Per Share                                 269,611              270          132,831              --             133,101
    At $.60 Per Share                                 120,834              121           72,379              --              72,500
    At $.70 Per Share                                  23,000               23           16,077              --              16,100
Services:
    At $.40 Per Share                                 145,000              145           60,755              --              60,900
    At $.50 Per Share                                  75,000               75           34,925              --              35,000
Exercise of Options For:
  Cash:
  At $.50 Per Share
    By Related Party                                  350,000              350          174,650              --             175,000
Services:
  At $.50 Per Share                                    35,000               35           17,465              --              17,500

Commissions Paid                                         --               --             (1,650)             --              (1,650)

Net Loss                                                 --               --               --            (426,803)         (426,803)
                                                  -----------      -----------      -----------       -----------       -----------

Balance - July 31, 1995                            10,960,563      $    10,961      $ 5,005,580       $(3,746,677)      $ 1,269,864
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                       F-7


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
         FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997

<TABLE>
<CAPTION>
                                                                                                       Deficit
                                                                                                     Accumulated
                                                       Common Stock               Capital Paid          In The
                                               ----------------------------       In Excess of       Development
                                                 Shares            Amount          Par Value            Stage              Total
                                               ----------       -----------       -----------        -----------        -----------
<S>                                            <C>              <C>               <C>                <C>                <C>        
Common Stock Issued For:
  Cash:
    At $.40 Per Share                              75,972       $        76       $    30,274        $      --          $    30,350
    At $.50 Per Share                             550,423               550           270,074               --              270,624
    At $.60 Per Share                             146,773               147            87,853                                88,000
    At $.70 Per Share                              55,722                56            38,949                                39,005
    At $.80 Per Share                             110,100               110            87,890                                88,000

Services:
    At $.40 Per Share                             104,150               104            38,296               --               38,400
    At $.50 Per Share                              42,010                42            20,963               --               21,005
    At $.60 Per Share                               4,600                 5             2,755                                 2,760
    At $.70 Per Share                             154,393               155           107,920                               108,075

  Commissions:
     At $.35 Per Share                             23,428                23               (23)
     At $.50 Per Share                             50,545                50               (50)
     At $.60 Per Share                              2,000                 2                (2)
     At $.70 Per Share                             12,036                12               (12)

  Exercise of Options:
    Cash:
      At $.35 Per Share
        By Related Party                           19,571                20             6,830                                 6,850

    Services:
      At $.35 Per Share
        By  Related Party                         200,429               200            69,950               --               70,150
      At $.50 Per Share                            95,000                95            47,405               --               47,500

     Compensation Portion of
        Options Exercised                            --                --             261,500               --              261,500

Net Loss                                             --                --                --             (956,043)          (956,043)
                                               ----------       -----------       -----------        -----------        -----------

Balance - July 31, 1996                        12,607,715            12,608         6,076,152         (4,702,720)         1,386,040
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                       F-8


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - (Continued)
         FOR THE PERIOD SEPTEMBER 17, 1982 (INCEPTION) TO JULY 31, 1997

<TABLE>
<CAPTION>
                                                                                                       Deficit
                                                                                                     Accumulated
                                                      Common Stock                Capital Paid         In The
                                              -----------------------------       In Excess of       Development
                                                 Shares           Amount           Par Value            Stage              Total
                                              -----------       -----------       -----------        -----------        -----------
<S>                                           <C>               <C>               <C>                <C>                <C>        
Common Stock Issued For:
  Cash:
    At $.35 Per Share                              50,000       $        50       $    17,450        $      --          $    17,500
    At $.40 Per Share                             323,983               324           128,471               --              128,795
    At $.50 Per Share                             763,881               762           381,174               --              381,936
    At $.60 Per Share                              16,667                17             9,983               --               10,000
    At $.70 Per Share                               7,143                 7             4,993               --                5,000
    At $.80 Per Share                              28,750                29            22,971               --               23,000

  Services:
    At $.50 Per Share                             295,884               296           147,646               --              147,942

  Commissions:
     At $.35 Per Share                             44,614                45               (45)
     At $.40 Per Share                             41,993                42               (42)
     At $.50 Per Share                             37,936                38               (38)

  Expense:
     At $.35 Per Share                              8,888                 9             3,099                                 3,108
     At $.40 Per Share                              9,645                10             3,848                                 3,858

  Property and Equipment
      At $.60 Per Share                             7,500                 8             4,492                                 4,500

  Exercise of Options
    Services:
      At $.35 Per Share
        By Related Party                          136,301               136            47,569                                47,705

Net Loss                                             --                --                --             (805,496)          (805,496)
                                              -----------       -----------       -----------        -----------        -----------

Balance - July 31, 1997                        14,380,900       $    14,381       $ 6,847,723        $(5,508,216)       $ 1,353,888
                                              ===========       ===========       ===========        ===========        ===========
</TABLE>


                                       F-9


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                                    For The Period  
                                                                                 For The Year Ended               September 17, 1982
                                                                                       July 31,                      (Inception)
                                                                            --------------------------------              To
                                                                               1997                 1996             July 31, 1997
                                                                               ----                 ----             ------------
<S>                                                                         <C>                  <C>                  <C>         
Cash Flow From Operating Activities:
  Net Loss                                                                  $  (805,496)         $  (956,043)         $(5,508,216)
  Adjustments to Reconcile Net Loss to
    Net Cash Used By Operating Activities:
      Depreciation                                                                6,350                8,344              344,832
      Loss on Write-Off of Investment                                              --                   --                 10,000
      Loss From Joint Venture                                                      --                   --                101,700
      Value of Common Stock Issued For Services                                 207,113              287,890            1,461,558
      Compensation Portion of Options Exercised                                    --                261,500              261,500
      Changes in Operating Assets and Liabilities:
        Decrease in Prepaid Expenses                                             51,408                  164                 --
        (Increase) in Other Current Assets                                         (769)                (207)                (976)
        Increase in Security Deposit                                               --                   --                 (3,667)
        Increase (Decrease) in Accrued Expenses
           and Taxes                                                            (13,896)             (79,352)              55,910
                                                                            -----------          -----------          -----------

Net Cash Used By Operating Activities                                          (555,290)            (477,704)          (3,277,359)
                                                                            -----------          -----------          -----------

Cash Flow From Investing Activities:
  Purchase of Property and Equipment                                            (10,697)             (15,636)          (1,705,650)
  Investment in Joint Venture                                                      --                   --               (101,700)
  Investment in Privately Held Company                                             --                   --                (10,000)
                                                                            -----------          -----------          -----------

Net Cash Used By Investing Activities                                           (10,697)             (15,636)          (1,817,350)
                                                                            -----------          -----------          -----------
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                      F-10


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                             STATEMENT OF CASH FLOWS
                                   (Continued)


<TABLE>
<CAPTION>
                                                                                                                    For The Period  
                                                                                 For The Year Ended               September 17, 1982
                                                                                       July 31,                      (Inception)
                                                                            --------------------------------              To
                                                                               1997                 1996             July 31, 1997
                                                                               ----                 ----             ------------
<S>                                                                         <C>                  <C>                  <C>         
Cash Flow From Financing Activities:
  (Increase) Decrease in Loans Receivable                                   $     2,082          $     1,101          $    (5,826)
  Increase in Loans Payable - Officers                                             --                   --                 18,673
  Repayment of Loans Payable - Officers                                          (9,673)              (7,000)             (18,673)
  Proceeds From Sale of Common Stock                                            566,231              522,828            5,553,058
  Commissions on Sale of Common Stock                                              --                   --                 (5,250)
  Expenses of Initial Public Offering                                              --                   --               (408,763)
  Purchase of Certificate of Deposit - Restricted                                  --                   --                 (5,000)
  Purchase of Mining Reclamation Bond                                              --                   --                 (6,000)
                                                                            -----------          -----------          -----------

Net Cash Provided By Financing Activities                                       558,640              516,929            5,122,219
                                                                            -----------          -----------          -----------

Increase In Cash and Cash Equivalents                                            (7,347)              23,589               27,510

Cash and Cash Equivalents - Beginning                                            34,857               11,268                 --
                                                                            -----------          -----------          -----------

Cash and Cash Equivalents - Ending                                          $    27,510          $    34,857          $    27,510
                                                                            ===========          ===========          ===========

Supplemental Cash Flow Information:
  Cash Paid For Interest                                                    $      --            $      --                   --
                                                                            ===========          ===========          ===========

  Cash Paid For Income Taxes                                                $       688          $     1,392          $    24,115
                                                                            ===========          ===========          ===========

Non-Cash Financing Activities:
  Issuances of Common Stock as Commissions
    on Sales of Common Stock                                                $    39,912          $    43,125          $   109,697
                                                                            ===========          ===========          ===========

  Issuance of Common Stock as Payment for Expenses                          $     6,966          $      --            $     6,966
                                                                            ===========          ===========          ===========

  Issuance of Common Stock as Payment for Property
    and Equipment                                                           $     4,500          $      --            $     4,500
                                                                            ===========          ===========          ===========
</TABLE>


The accompanying notes are an integral part of the financial statements.


                                      F-11


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 1 - Summary of Significant Accounting Policies

     Basis of Presentation

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue as a going  concern.  However,  the Company has incurred
recurring losses through July 31, 1997 aggregating $5,508,216, and has a working
capital  deficiency  at July 31, 1997 of 21,598 that  raises  substantial  doubt
about its ability to continue as a going  concern.  As indicated in Note 10, the
Company  is  in  the  process  of  raising  additional  capital  and  financing.
Continuation of the Company is dependent on (1) consummation of the contemplated
financings,   (2)  achieving   sufficiently   profitable   operations   and  (3)
subsequently   maintaining  adequate  financing   arrangements.   The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

     Property and Equipment

     Property and equipment is reported at cost.  It is the Company's  policy to
capitalize  costs  incurred  to improve  and  develop  the  mining  and  milling
property. General and administrative expenses are expensed as incurred.

     Depletion of mine and mill improvements is computed at cost using the units
of  production  method.  The Company has made no provision  for depletion as the
mine  and  mill  is not in the  production  stage.  Provision  is  made  for the
depreciation  of office  furniture and fixtures,  machinery and  equipment,  and
building.  Depreciation  is computed  using both  straight-line  and  accelerate
methods over the estimated useful lives of the related assets.


                                      F-12


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 1 - Summary of Significant Accounting Policies (Continued)

     Income Taxes

     The Company accounts for income taxes under the asset and liability method.
The  objective of the asset and  liability  method is to establish  deferred tax
assets and  liabilities  for the  temporary  differences  between the  financial
reporting  basis and the tax basis of the Company's  assets and  liabilities  at
enacted tax rates  expected to be in effect  when such  amounts are  realized or
settled.

NOTE 2 - Mining Reclamation Bonds

     This  represents  certificates  of  deposit  that  have been  deposited  as
security for a Mining Reclamation Bond.

NOTE 3 - Loans Receivable

     Included in loans  receivable are unsecured  short-term  revolving loans of
$5,052 paid by the Company to Franklin Consolidated Mining Co., Inc., a publicly
traded corporation. These are non-interest bearing and due on demand.


                                      F-13


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 4 - Property and Equipment

     Property and equipment consists of the following:

     Land                                                             $   24,364
     Building                                                             22,655
     Machinery and Equipment                                             358,230
     Mining Claims and
       Leasehold Improvements                                            106,786
     Mill and Mining Improvements                                      1,192,658
     Office Furniture, Fixtures
       and Equipment                                                         958
                                                                      ----------
                                                                       1,705,651
     Less:  Accumulated Depreciation                                     344,832
                                                                      ----------

                                                                      $1,360,819
                                                                      ==========

NOTE 5 - Accrued Expenses and Taxes

     Included in accrued expenses and taxes are amounts aggregating $11,923 owed
to certain officers and stockholders of the Company for unpaid salaries.

NOTE 6 - Stockholders' Equity

     At various stages in the Company's  development,  shares of stock have been
issued in exchange  for the fair market  value,  as  determined  by the Board of
Directors,  of services  received  with a  corresponding  charge to  operations,
property and  equipment or capital paid in excess of par value  depending on the
nature of the services provided.


                                      F-14


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 6 - Stockholders' Equity (Continued)

     Common Stock Reserved For Issuance

     The following is a table with respect to common stock  reserved for options
as of July 31, 1997:

                                                          Options Outstanding
                                                      --------------------------
                                                      Number of      Price Range
                                                       Shares         Per Share
                                                      --------        ---------
Balance - July 1, 1991                                     -0-        $  --

  Options Granted:
    Services                                           400,000        .10 - .50
    Services - Related Parties                         225,000              .50

  Options Exercised - Related Parties                 (100,000)             .50
                                                      --------        ---------
Outstanding - July 31, 1992                            525,000        .10 - .50

  Options Granted:
    Services                                           200,000              .50
                                                      --------        ---------
Outstanding - July 31, 1993                            725,000        .10 - .50

  Options Granted:
    Services                                           310,000              .50
    Services - Related Parties                         350,000              .50

  Exercised:
    Services                                           (35,000)             .50
    Services - Related Parties                        (150,000)             .50

  Expired:                                            (525,000)       .10 - .50
                                                      --------        ---------

Outstanding - July 31, 1994                            675,000              .50

  Exercised:
    Services                                           (35,000)             .50
    Services - Related Parties                        (350,000)             .50
                                                      --------        ---------

Outstanding - July 31, 1995                            290,000              .50


                                      F-15


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 6 - Stockholders' Equity (Continued)

     Common Stock Reserved For Issuance

     The following is a table with respect to common stock  reserved for options
as of July 31, 1997:

                                                          Options Outstanding
                                                   -----------------------------
                                                    Number of        Price Range
                                                     Shares           Per Share
                                                   ----------         ---------
  Options Granted:
      Services - Related Parties                      600,000              .35

  Exercised:
      Cash - Related Parties                          (17,500)             .40
      Services                                        (95,000)             .50
      Services -Related Parties                      (202,500)             .35

Expired:                                             (165,000)             .50
                                                   ----------        ---------

Outstanding - July 31, 1996                           410,000        .35 - .50

  Options Granted
      Services - Related Party                      1,545,000              .35
      Services                                         10,000              .35

  Exercised
      Service - Related Party                        (101,730)             .35
      Expired                                         (30,000)             .35
                                                   ----------        ---------

Outstanding July 31, 1997                           1,833,270        $     .35
                                                   ==========        =========

     Authorized Common Stock

     In September  1993 the Company's  shareholders  approved an increase in the
unauthorized common stock from 100,000,000 shares to 150,000,000 shares.

     Effective  April 11,  1997 the Company  underwent a 1 for 10 reverse  split
with all fractions being rounded up into new common stock.

     All  reference  to common stock is restated to reflect the 1 for 10 reverse
split.


                                      F-16


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 7 - Income Taxes

     For income tax purposes,  the Company has a net operating loss carryforward
at July 31, 1997 of  approximately  $4,300,000  beginning  to expire at July 31,
2001 if not offset against future federal taxable income.

     Pursuant to FASB 109, the Company has elected to take a 100% reserve on the
deferred  tax  asset  arising  from  the  net  operating  loss   $1,462,000  and
accordingly there is no cumulative effect adjustment or current year tax benefit
recorded.

NOTE 8 - Commitments and Contingencies

     Litigation

     In June 1996, the Company commenced an action against Franklin Consolidated
Mining Company, Inc. ("Franklin") in District Court, Clear Creek County Colorado
with respect to certain monies advanced by the Company to Franklin in connection
with expenses attributable to common office space. On July 10, 1996, the Company
entered  into  a  Settlement   Agreement  with  Franklin   Consolidated   Mining
Corporation  pursuant to which it was agreed that the Company  would  settle all
claims  involved  for  $18,000  and the Company  will as soon as  possible,  (I)
discontinue  the action  against  Franklin as well as withdraw any motions filed
with respect thereto, (ii) remove any liens or other encumbrances which may have
been filed  against  the assets of  Franklin  and (iii)  execute  releases  with
respect  to such  claims.  As of July 31,  1997  Franklin  has paid the  Company
$18,000 of the $18,000 owed under the Settlement Agreement.


                                      F-17


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 9 - Refining Contract

     The Company has entered into an agreement with ASARCO  Incorporated for the
sale and  refining of lead  concentrates  produced  from the  Company's  mine in
Colorado. The Agreement provides that the Company may ship metallic materials in
lots of 200 - 300 tons to ASARCO's smelter in East Helena,  Montana. ASARCO will
take delivery of the material,  perform the smelting  operations and pay for the
metals based on the London Metals Exchange less certain  deductions for expenses
of smelting and adjustment for excess impurities, including water. The period of
the agreement  commenced on September 1, 1995 through and  including  August 31,
1997 and  continues  thereafter  subject  to  cancellation  on sixty  (60) days'
written notice by either party;  however,  the agreement shall not extend beyond
June 30, 2000.

NOTE 10 - Liquidity and Going Concern Uncertainty

     The Company has incurred recurring losses amounting to $5,508,216 and has a
working  capital  deficiency  of $21,598 at July 31,  1997.  These  events raise
substantial doubt about the Company's ability to continue as a going concern.

     Specific  plans  to  obtain  financing  for a full  scale  mining  and mill
operation may include a combination of one or more of the following:

          a. Private  placements  of the Company's  securities to  institutions,
     private individuals, mining companies, and/or investment groups. During the
     fiscal year ended July 31, 1997 the Company raised  approximately  $566,231
     through the sales of common stock to  investors,  which enabled the Company
     to complete the Hunter Shaft.


                                      F-18


<PAGE>


                       LEADVILLE MINING AND MILLING CORP.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTES TO FINANCIAL STATEMENTS
                                  JULY 31, 1997


NOTE 10 - Liquidity and Going Concern Uncertainty (Continued)

          b. A working  arrangement  with a mining company pursuant to which the
     Company would mine and the other  company would mill,  smelt and market the
     products. Under these conditions,  the Company's cost would be concentrated
     on the mining effort only.  The Company has  negotiated  such an agreement.
     The  agreement ran for an initial two year term.  Since  September 1, 1997,
     the  agreement is  terminable  by either party on sixty (60) days'  notice.
     Notwithstanding  the foregoing,  the agreement would not extend beyond June
     30,  2000.  The  Company  would  deliver  metallic  minerals  to the mining
     company's mill site six miles southeast of Leadville,  Colorado.  The price
     for the  material  would be based upon the London  Metals  Exchange  market
     price less certain  deductions  for treatment and impurities on the date of
     delivery.

     Assuming  that the Company is able to obtain  funds from one or more of the
above  sources,  planned  activities  over the next twelve months should include
development of B-Zone  mineral  structure in preparation of mining and tunnel to
Hunter  Shaft,  drive  tunnel to Weston  fault  mineral  structure  and develop,
develop B-Zone minerals, operate mine and mill.

     There is no assurance  whatsoever that any of the Company's  proposed plans
to raise  capital and  otherwise  fund  operations  will prove  successful.  The
Company's  ability to continue as a going concern is dependent  upon its ability
to obtain sufficient  funding as discussed above and its inability to do so will
delay or cease the Company's planned operations as discussed above.


                                      F-19


<PAGE>

                                    PART III
                                    --------

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act.

     The following table sets forth certain information concerning the directors
and executive officers of the Company:

                                         First
                                         Became
Name                        Age          Director     Position
----                        ---          --------     --------
                                                     
Donald W. Wilson            69           9/22/82      President & Director
                                                     
Gifford A. Dieterle         66           9/22/82      Executive Vice President,
                                                         Secretary, Treasurer
                                                         & Chairman of the Board
                                                     
Robert Roningen             65           9/14/93      Vice President- Operations
                                                         & Director
                                                     
Horst Scherp                69           1/25/95      Director
                                                     
Jack V. Everett             76           1/25/95      Director
                                                    


                                       14
<PAGE>


     Directors  are  elected  at the  meeting  of  shareholders  called for that
purpose  and hold office  until the next  shareholders  meeting  called for that
purpose or until their  resignation  or death.  Directors can also be elected by
the Board of  Directors  and hold  service  until  their  resignation  or death.
Officers of the  corporation  are elected by the directors at meetings called by
the directors for its purpose.  Robert L. Elder and Richard  Asbury  resigned as
officers and/or directors in December 1994.

     DONALD W. WILSON, President and Director. His highest educational degree is
a High School diploma obtained from Leadville High School in Leadville, Colorado
in 1949.  He  additionally  attended the  Colorado  School of Mines in 1969 on a
non-matriculating  basis, where he took courses in geology,  surveying,  mapping
and mathematics.  He did not graduate and therefore did not obtain a degree. His
employment history since 1977 consists of the following: From May 1983 until the
present, he has been President of the Company. From January 1981 to May 1983, he
was mine and mill manager of the Franklin Mine, a gold mine in Colorado which is
owned by  Franklin  Consolidated  Mining  Company.  From  1979 to  1980,  he was
employed  by M.S.T.  Company - Rio  Blanco  Oil Shale  Corporation  as a project
engineer.  From  1977 to  1979,  he was  employed  by  United  Nuclear-Homestake
Partnership,  Inc.,  Grants,  New Mexico as a  superintendent  of shaft  sinking
operation.

     GIFFORD A. DIETERLE,  Executive  Vice-President,  Treasurer and Chairman of
the Board of Directors of the Company.  His highest educational degree is a M.S.
in Geology obtained from New York University.  From 1977 until July 1993, he was
Chairman, Treasurer and Executive Vice-President of Franklin Consolidated Mining
Company. From 1965 to 1987, he was lecturer in geology at the City University of
N.Y. (Hunter Division).  Since 1962, he has been a consulting  geologist engaged
in the geological evaluation of oil and mineral properties.  From 1978 until the
present, he has been a registered representative with Datek Securities.

     ROBERT RONINGEN,  Vice  President-Operations  and a director, has, for more
than  the  past  five  years,  been  engaged  in the  practice  of law as a sole
practitioner  and  is  a  self-employed   consultant   geophysicist  in  Duluth,
Minnesota.  From 1988 to August 1993, he was an officer and director of Franklin
Consolidated Mining Company,  Inc. He graduated from the University of Minnesota
in 1957 with a B.A. in geology and in 1962 with a degree in Law.

     HORST  SCHERP,  a director,  has been an Associate  Professor of Geology at
Hunter  College of the City of New York since 1963.  From 1980 to 1987, he was a
Director and geologist for Jeger Oil Corp. Mr. Scherp received a Ph.D in geology
from the University of Gottingen, Germany, in 1959.

     JACK V. EVERETT, a director,  has been a consulting mining geologist for 25
years, with expertise in all phases of exploration for base and precious metals.
Following his 1947  graduation from Michigan State  University,  he was District
Geologist  for  Pickands  Mather & Company on the Cuyuna Iron Range,  Minnesota.
From 1951 to 1970, he was Chief Geologist and Exploration Manager for W.S. Moore
Company,  Duluth,  Minnesota,  an iron mining  company  with gold and base metal
sulfide holdings in the U.S. and Canada.



                                       15
<PAGE>



     Compliance With Section 16(a) of The Securities Exchange Act of 1934

     To the Company's  knowledge,  based solely on a review of such materials as
are required by the Securities and Exchange Commission,  no officer, director or
beneficial  holder  of  more  than  ten  percent  of the  Company's  issued  and
outstanding shares of Common Stock failed to timely file with the Securities and
Exchange  Commission  any form or report  required  to be so filed  pursuant  to
Section  16(a) of the  Securities  Exchange  Act of 1934  during the fiscal year
ended  September 30, 1996,  except that Gifford A.  Dieterle  failed to file two
reports  concerning two  transactions;  and Donald W. Wilson,  Robert  Roningen,
Horst Scherp and Jack V. Everett each failed to file one report  concerning  one
transaction.

     The following table shows all the cash  compensation  paid or to be paid by
the Company or any of its  subsidiaries,  as well as certain other  compensation
paid or  accrued,  during the fiscal  years  indicated,  to the Chief  Executive
Officer for such period in all capacities in which he served. No other Executive
Officer received total annual salary and bonus in excess of $100,000.

                                                     SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                                Long-Term Compensation
                                                                                   -------------------------------------------------
                                          Annual Compensation                             Awards                      Payouts
                           --------------------------------------------------      ---------------------      ----------------------
        (a)                 (b)         (c)           (d)             (e)            (f)           (g)         (h)           (i)
------------------         -----       -----         -----           -----          -----         -----       -----         -----
                                                                     Other         Restrict-                               All Other
                                                                     Annual        ed Stock                    LTIP        Compensa
Name and Principal                                                  Compen-         Award        Options      Payouts       -tion
   Position                Year        Salary         ($)           sation($)        ($)           SARs         ($)          (i)
------------------         -----       ------        -----          ---------      ---------     -------      -------      ---------
<S>                        <C>         <C>            <C>             <C>            <C>         <C>            <C>           <C>
Donald W. Wilson           1997        54,586         -0-             -0-            -0-         200,000        -0-           -0-
Chief Executive            1996        54,023         -0-             -0-            -0-         200,000        -0-           -0-
Officer                    1995        53,472         -0-             -0-            -0-            -0-         -0-           -0-
</TABLE>

     The following  table sets forth  information  with respect to the Company's
Executive  Officers  concerning  the  grants of options  and Stock  Appreciation
Rights ("SAR") during the past fiscal year:

                                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                               Individual Grants

<TABLE>
<CAPTION>
      (a)                   (b)                           (c)                  (d)                        (e)
-------------------------------------------------------------------------------------------------------------------
                                                   Percent of Total
                                                     Options/SARs
                          Options/                    Granted to
                           SARs                       Employed in        Exercise or Base             Expiration
Name                      Granted                     Fiscal Year          Price ($/SH)                  Date
-------------------------------------------------------------------------------------------------------------------
<S>                       <C>                            <C>                   <C>                   <C>    
Donald W. Wilson          350,000                        31.5%                 $.35                  April 2, 1998
Gifford Dieterle          350,000                        31.5%                 $.35                  April 2, 1998
Robert Roningen           350,000                        31.5%                 $.35                  April 2, 1998
Jack Everett               50,000                         4.5%                 $.35                  April 2, 1998
Horst Scherp               10,000                         1.0%                 $.35                  April 2, 1998
</TABLE>



                                       16
<PAGE>


     The following  table sets forth  information  with respect to the Company's
Executive  Officers  concerning  exercise of options during the last fiscal year
and unexercised options and SARs held as of the end of the fiscal year:

<TABLE>
<CAPTION>
                         Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR
      (a)                             (b)                        (c)                        (d)                          (e)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       Value of
                                                                                         Number of                    Unexercised
                                                                                        Unexercised                  In-the-Money
                                                                                        Options/SARs                  Option/SARs
                                     Shares                                             at FY-End(#)                  at FY-End(#)
                                  Acquired on                    Value                  Exercisable/                  Exercisable/
Name                              Exercise (#)                 Realized                 Unexercisable                Unexercisable
----                              ------------                 --------                 -------------                -------------
<S>                                  <C>                       <C>                         <C>                             <C>
Donald W. Wilson                       -0-                         -0-                     550,000                         --
Gifford Dieterle                     96,730                    $  9,673                    403,270                         --
Robert Roningen                        -0-                         -0-                     350,000                         --
Jack Everett                           -0-                         -0-                      50,000                         --
Horst Scherp                         50,000                      17,500                     10,000                         --
</TABLE>

     The following  table sets forth  information  with respect to the Executive
Officers  concerning  awards  under long term  incentive  plans  during the last
fiscal year:

<TABLE>
<CAPTION>
                                                                     Estimated Future Payouts under Non-Stock
                                                                     Price Based Plans
(a)                       (b)                 (c)                       (d)                  (e)               (f)
                                                                     ------------------------------------------------
                                          Performance
                      Number of           or Other
                      Shares, Units       Period Until
                      or Other            Maturation or              Threshold              Target           Maximum
Name                  Rights(#)           Payout                     ($ or #)              ($ or #)          ($ or #)
----                  ------------        -------------              ---------             --------          -------
<S>                       <C>                 <C>                      <C>                    <C>               <C>
Donald W. Wilson          -0-           
Gifford Dieterle          -0-           
Robert Roningen           -0-           
Jack Everett              -0-           
Horst Scherp              -0-           
</TABLE>
                                        

Directors  are not  compensated  for  acting  in their  capacity  as  Directors.
Directors are reimbursed for their  accountable  expenses  incurred in attending
meetings and conducting their duties.


Item 11.  Security Ownership of Certain Beneficial Owners and Management

(a)  Security Ownership of Certain Beneficial Owners -- The persons set forth on
     the charts  below are known to the Company to be the  beneficial  owners of
     more than 5% of the  Company's  outstanding  voting Common Stock as of July
     31, 1997.

(b)  Security  Ownership of Management -- Information  concerning the number and
     percentage  of shares of voting Common Stock of the Company owned of record
     and  beneficially by management as of November 7, 1997, is set forth on the
     charts below.



                                       17
<PAGE>


<TABLE>
<CAPTION>
                            Name of                          Amount & Nature
                           Beneficial                         of Beneficial                                Approximate
Title of Class               Owner                         Ownership 11/7/97(1)                         Percentage(2)(3)
--------------               -----                         --------------------                         ----------------

<S>                    <C>                                  <C>                                              <C> 
Common Stock           Donald W. Wilson                     1,335,100(3)                                      8.9%
                                                                                                  
Common Stock           Gifford A. Dieterle                  1,421,105(3)(4)                                   9.6%
                                                                                                  
Common Stock           Jack Everett                           325,000(3)                                      2.2%
                                                                                                  
Common Stock           Robert Roningen                        666,688(3)(5)                                   4.5%
                                                                                                  
Common Stock           Horst Scherp                            15,000(3)                                       *
                                                                                                  
   All Officers and                                                                               
   Directors as a                                                                                 
   Group (5)                                                3,762,893(3)(4)(5)                               23.9%
</TABLE>

----------
* Less than one percent.

(1)  Supplied by the persons set forth above.

(2)  Based upon 14,380,900 shares issued and outstanding as of November 7, 1997.

(3)  For  Messrs.  Wilson,  Dieterle,  Everett,  Roningen  and Scherp  includes,
     respectively, 550,000 shares, 403,270 shares, 75,000 shares, 350,000 shares
     and 10,00 shares issuable upon exercise of options and/or warrants.

(4)  Includes shares owned by Mr. Dieterle's wife.

(5)  Includes shares owned by Mr. Roningen's wife and children.


Item 12. Certain Relationships and Related Transactions.

     Effective April 11, 1997, the Company reverse split its outstanding  shares
of Common Stock on a one-for-ten basis and adjusted the terms of all outstanding
options and  warrants  accordingly.  Unless the context  specifically  indicates
otherwise,  all  references  herein to Shares,  options and  warrants  have been
adjusted to take into account the reverse split.



                                       18
<PAGE>


     Between  September  1, 1991 and July 31,  1995,  the Company  and  Franklin
Consolidated  Mining & Milling  Company lent to one another on short term basis,
small  amounts of money for  current  operations.  The  Company  currently  is a
creditor of Franklin  Consolidated Mining Company in the amount of approximately
$5,826.

     On April 2,  1997,  the  Company  issued the  following  options to certain
officers  and  directors.  Donald  Wilson - option to purchase  350,000  shares;
Gifford Dieterle - option to purchase 350,000 shares;  Robert Roningen option to
purchase 350,000 shares;  Jack Everett -option to purchase 50,000 shares;  Horst
Scherp - option to purchase  10,000  shares.  All  options  granted on that date
expire on April 2, 2002 and are exercisable at $.35 per share.

     On January 5, 1996,  the Company  issued the  following  options to certain
officers  and  directors.  Donald  Wilson - option to purchase  200,000  shares;
Gifford Dieterle - option to purchase  220,000 shares;  Robert Roningen - option
to purchase  150,000  shares;  Jack Everett - option to purchase  25,000 shares;
Horst Scherp - option to purchase 5,000 shares. All options granted on that date
expire on January 5, 1998 and are exercisable at $.35 per share.

     During fiscal 1993 and 1994, Gifford A. Dieterle an officer and director of
the Company,  loaned the Company  $18,873,  which funds were used for  operating
expenses.  There were no specific  repayment  terms and the loans were  interest
free. As of July 31, 1997, these loans had been paid in full.

Item 13. Exhibits and Reports on Form 8-K.

     Exhibits

      3.a  Certificate  of   Incorporation   of  Company(1) 

      3.b   Amendments to Certificate of Incorporation  of Company(1) 

      3.c   By-Laws of Company(1)

     10.a  Mining Claims(1)

     10.b  ASARCO Agreement

----------

     (1)  Previously filed as an exhibit to the Company's Registration Statement
          on Form S-18 (SEC File No.  2-86160-NY) filed on or about November 10,
          1983, and incorporated herein by this reference.

Reports of Form 8-K

     The  Company  has filed the  following  Reports of Form 8-K during the year
ended July 31, 1997 with the  principal  office of the  Securities  and Exchange
Commission in Washington, D.C.:

               None.



                                       19
<PAGE>




                              AGREEMENT NO. L95035


                     LEADVILLE MINING & MILLING CORPORATION
                                       AND
                               ASARCO Incorporated


                                       ORE
                            DATED: SEPTEMBER 1, 1995





<PAGE>


                              AGREEMENT NO. L95035
                              --------------------

LEADVILLE MINING & MILLING CORPORATION, 700 Carr Street, Lakewood, Colorado
80215, hereinafter called "SHIPPER" agrees to deliver...........................

                                       AND

ASARCO Incorporated, 180 Maiden Lane, New York, NY 10038, hereinafter called
"ASARCO" agrees to receive and process..........................................


1.   PRODUCT
     Ore as produced from the properties of Leadville Mining & Milling
     Corporation.

2.   ANALYSIS
     The product shall substantially assay:

                    Pb: >2.0%                      Zn:  >4.5%
                    Ag: >4.0 opst                  Cu:  0- 1.0%
                    Au: >0.1 opst

3.   QUANTITY
     As available in lots of at least 200 - 300 tons.

4.   DURATION
     The period of this agreement shall commence with product delivered on or
     after September 1, 1995 through and including August 31, 1997 and shall
     continue thereafter on a sixty (60) day written notice of cancellation by
     either party, provided, however, the agreement shall not extend beyond June
     30, 2000.

5.   DELIVERY
     Freight prepaid F.O.B. truck at ASARCO's Leadville, Black Cloud Mine in
     Colorado (hereinafter called "LEADVILLE"). The delivery is to be scheduled
     by appointment, details of which will be mutually arranged. Truck receiving
     hours are presently from 8:00 a.m. to 2:00 p.m., Monday through Friday,
     major holidays excepted.

6.   DATE OF DELIVERY
     The date of delivery Of product is the date of arrival of the last railcar
     or truck of each smelter lot at LEADVILLE.



<PAGE>


LEADVILLE MINING & MILLING CORPORATION                      AGREEMENT NO. L95035


7.   TITLE & RISK
     Title and all risks of loss shall pass to ASARCO upon delivery of product.

8.   PRICE
     The purchase price of the product is the sum of the payments less the sum
     of the deductions specified below.


                                    PAYMENTS
                                    --------

9.   GOLD
     Deduct 0.02 troy ounce per ton of product from the gold assay and pay for
     75% of the remaining gold content at the daily London Final gold quotation,
     as published in Metals Week, averaged for the quotational period, less a
     deduction of $5.00 per troy ounce of payable gold.

10.  SILVER
     Deduct 1.5 troy ounce per ton of product from the silver assay and pay for
     70% of the remaining silver content, at the Handy and Harman New York
     quotation for refined silver, as published in Metals Week, averaged for the
     quotational period, less a deduction of $0.25 per troy ounce of payable
     silver.

11.  LEAD
     Pay for 65% of the remaining lead content at the average of the four LME
     quotations for refined lead, as officially quoted by the London Metal
     Exchange morning session and published in Metals Week (currently LME CASH
     and LME THR-MO), averaged for the quotational period, less a deduction of
     $0.05 per payable pound of lead.

     Notwithstanding the foregoing, the maximum quotation for lead payment above
     shall be the London Metal Exchange Settlement quotation, as published in
     Metals Week (currently LME SETTLEMENT), averaged for the quotational
     period.

12.  ZINC
     Deduct 1.0 percent from the zinc assay and pay for 60% of the remaining
     zinc content, at the LME Settlement price as published in Metals Week,
     averaged for the quotational period, less a deduction of $0.25 per pound of
     payable zinc.


                                      -2-


<PAGE>




LEADVILLE MINING &  MILLING CORPORATION                     AGREEMENT NO. L95035

13.  QUOTATIONAL PERIOD
     The quotational period for gold, silver, lead and zinc shall be the average
     of the fourth (4th) calendar month following date of delivery of product.

No payment will be made for any metal or content except as above specified. From
the total of the above, make the following:


                                   DEDUCTIONS
                                   ----------

14)  TREATMENT DEDUCTION
     The base treatment deduction shall be $15.00 per dry short ton of product.

15)  ADDITIONAL DEDUCTIONS
     The deductions specified above are for product free of deleterious
     impurities. Product delivered containing such impurities shall be subject
     to additional deductions in accordance with the schedule below.

     A) Arsenic:    Deduct $20.00 per ton for each 1 unit that the arsenic assay
                    exceeds 0.5%, fractions in proportion.

     B) Antimony:   Deduct $20.00 per ton for each 1 unit that the antimony 
                    assay exceeds 0.8%, fractions in proportion.

     C) Copper:     Deduct $15.00 per ton for each 1 unit that the copper assay 
                    exceeds 0.15%, fractions in proportion.

     If product should contain any other deleterious impurities which, in
     ASARCO's sole judgment, preclude economic treatment of product, then ASARCO
     may terminate this contract on ninety (90) days notice, unless mutual
     agreement is reached as to appropriate deduction for such impurities.

16.  SETTLEMENT
     ASARCO shall make a one hundred percent (100%) provisional payment when all
     necessary information is available. Final settlement to be made on the
     tenth (l0th) business day of the month following the quotational period.


                                      -3-

<PAGE>


LEADVILLE MINING & MILLING CORPORATION                      AGREEMENT NO. L95035


 17. WEIGHING, SAMPLING & ASSAYING
     Weighing and sampling (at which SHIPPER or SHIPPER's representative may be
     present) as done by ASARCO according to ASARCO's standard practice at the
     receiving plant promptly after receipt of product, will be accepted as
     final. The absence of SHIPPER or SHIPPER's representative shall be deemed a
     waiver of this right in each instance. After sampling, the product may be
     placed in process, commingled, or otherwise disposed of by ASARCO. The
     sample of each lot to be used for determination of metal content shall be
     divided into not less than four equal parts; one to be retained by ASARCO,
     one to be forwarded to SHIPPER, one to be retained for umpire purposes and
     one for reserve. Each party shall assay its part and the assay results
     shall be exchanged. Umpires, when required, shall be so instructed by
     ASARCO. When the difference between the assays of ASARCO and SHIPPER is
     within the splitting limits designated below, the exact mean of the assays
     shall be the settlement assay. When the difference between the assays of
     ASARCO and SHIPPER is greater than the splitting limits specified, an
     umpire shall be selected in rotation from the list designated below, whose
     assay shall be the settlement assay if within the limits of the assays of
     the two parties; and, if not, the assay of the party nearer to the umpire
     shall be the settlement assay. The cost of the umpire shall be borne by the
     party whose assay is further from the umpire assay; and, in the event the
     umpire assay is the exact mean of the assays of the parties, then the cost
     shall be borne equally by both parties. In case of SHIPPER's failure to
     submit assays within sixty (60) days from the date samples are available to
     SHIPPER, ASARCO's assays shall govern. The splitting limits and the umpire
     assayers shown below shall be subject to change by mutual agreement. Gold
     and silver assays are to be determined by commercial fire assay method.

     Splitting Limits
     ----------------
     Au: 0.02 troy oz./ton                   As: 0.5%
     Ag: 0.5 troy oz./ton                    Sb: 0.5%
     Pb: 0.5%                                Cu: 0.1%
     Zn: 0.5%

     Umpire Assayers
     ---------------
     Assay Laboratories                   A. H. Knight Laboratories
     2155 Last Chance Road                P. O. Box 3504
     Elko, NV 89801                       130 Tredd Street
     Telephone: (702) 738-3614            Sparatanberg, SC 29304


                                      -4-

<PAGE>


LEADVILLE MINING & MILLING CORPORATION                      AGREEMENT NO. L95035


18.  TAXES
     The terms of this agreement are based on the taxes and other governmental
     charges to which ASARCO is subject as of July 1, 1995. Any increase
     subsequent to said date in the amount paid by ASARCO for taxes or other
     governmental charges national, state, local or municipal imposed in
     respect to or measured by the product covered hereunder, or the production
     extraction, smelting, refining, sale, transportation, proceeds or value
     thereof, or of the contents there of, including, without limitation any
     such payment based on pollutant emissions but excluding income taxes
     levied upon ASARCO, shall be for the account of SHIPPER and may be invoiced
     at time of settlement or billed separately at such later time as the
     amount due can be determined.

19.  FORCE MAJEURE
     Performance of this agreement is subject to any delays caused by strikes or
     other disabling causes beyond the control of either party.

20.  DEFINITIONS
     A "ton" means a dry short ton or 2,000 dry avoirdupois pounds. 
     A "unit" means 1% or 20 pounds per ton. 
     A "calendar month" means a named month in the calendar. 
     A "business day" means a named day in the calendar, Saturdays, Sundays, and
     major holidays excluded. 
     A "dollar ($) or cent" means lawful currency of the United States.

21.  DIVERSION
     ASARCO may at its sole option sell or divert the product to another person
     and plant and, subject to the other provisions of this clause, any increase
     or decrease in freight as against delivery as provided herein shall be for
     ASARCO's account. SHIPPER shall have the obligation to comply with ASARCO's
     diversion instructions including but not limited to shipping instructions
     in accordance with applicable freight tariffs governing such diversion. Any
     additional costs incurred by reason of SHIPPER's failure to comply with
     said instructions and freight tariffs shall be for SHIPPER's account. In
     case of such diversion, weighing and sampling shall be performed at the
     receiving plant and date of delivery of product shall be the date of
     arrival of the last car of each lot at the receiving plant. All other
     provisions of the agreement shall apply in all other respects as if no
     diversion had occurred. Notwithstanding the foregoing, ASARCO shall in no
     case, including an event of force majeure at plant designated to receive
     product, be under any obligation to divert the product.


                                       -5-

<PAGE>


LEADVILLE MINING & MILLING CORPORATION                      AGREEMENT NO. L95035

22.  SUSPENSION OF QUOTATIONS 

     In the pricing of product or any metal contained therein, if one or more
     suspensions of quotations occur for any cause resulting in the absence of
     the quotation for more than three (3) days during the quotational period
     specified in this agreement, then the beginning of said period (or the
     balance thereof if suspension begins during the period) shall be deferred a
     number of quotational days equal to the number of quotational days
     occurring during the entire time of suspension, whether before, during or
     after said quotational period. When the normal number of quotations for the
     period specified in this agreement have been thus obtained, such quotations
     shall be averaged for pricing. One or more suspensions of quotations
     aggregating three (3) days or less during a quotational period shall be
     disregarded and the remaining quotations shall be averaged for pricing.

     In case any firm or publication whose quotations are the basis for pricing
     any metal under this agreement shall go out of business, cease
     publication, or discontinue the making of quotations, then the quotations
     by such other firm or publication, as the parties shall agree upon shall
     be used.

23.  NOTICES

     All notices, requests and other communications hereunder shall be in
     writing and shall be deemed to have been duly given or made when sent by
     first-class mail postage prepaid, addressed:

                      If to ASARCO:        ASARCO Incorporated
                                           180 Maiden Lane
                                           New York NY 10038
                                           Attention: Director, Ore Department
                                           Telephone: (212) 510-2000
                                           Telecopy: (212) 510-2054

                      Copy to Omaha:       ASARCO Incorporated
                                           Black Cloud Mine
                                           Leadville Unit
                                           P.O. Box 936
                                           Leadville, Colorado 80461
                                           Attention: Plant Manager
                                           Telecopy: (719) 486-3874


                                      -6-

<PAGE>


LEADVILLE MINING & MILLING CORPORATION                      AGREEMENT NO. L95035


 23. NOTICES (Continued)
                and if to SHIPPER:    Leadville Mining & Milling Corporation
                                      700 Carr Street
                                      Lakewood, Colorado 80215
                                      Attention: Mr. Donald Wilson
                                      Telephone: (303) 328-3398

     or, in each case, at other such address as may be hereafter or has been
     designated most recently in writing by the addressee to the addresser.

     Any notice given hereunder may be given by telegraph or telex and
     confirmed by mail in due course in which case such notice shall be deemed
     given or served when sent in telegraphic form.

24.  SUCCESSION
     This agreement shall bind and inure to the benefit of the parties hereto,
     their legal representatives, successors and assigns. This agreement shall
     not be assignable by either party hereto without the written consent of
     the other. Such consent shall not be unreasonably withheld.

25.  WAIVER
     Waiver of any breach of any provision hereof shall not be deemed to be a
     waiver of any other provision hereof or of any subsequent breach of such
     provision.

This agreement shall take effect as a contract made in accordance with and be
governed by the laws of the State of New York and shall come into full force and
effect as of July 1, 1995, when signed by both parties.

LEADVILLE MINING & MILLING                       ASARCO Incorporated
  CORPORATION

By /s/ [legible]                                By /s/ [illegible]
--------------------------------                   ----------------------------
                                                   Director, Ore Department


GFA:lmd
7/25/95


                                      -7-


<PAGE>

     Statements  contained  in  this  Form  10-KSB  as to  the  contents  of any
agreement  or other  document  referred  to are not  complete,  and  where  such
agreement  or other  document is an exhibit to this Report or is included in any
forms  indicated  above,  each such  statement  is deemed  to be  qualified  and
amplified in all respects by such provisions.

                                      -8-

<PAGE>



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           LEADVILLE MINING AND MILLING CORP.


Dated: November 13, 1997                   By: /s/ Donald W. Wilson
                                              ----------------------------------
                                                Donald W. Wilson, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

SIGNATURES                    TITLE                           DATE
----------                    -----                           ----

/s/ Donald W. Wilson
-----------------------       President, Principal            November 13, 1997
Donald W. Wilson              Executive Officer and           
                              a Director                      

/s/ Gifford A. Dieterle                                                         
-----------------------       Treasurer and                   November 13, 1997
Gifford A. Dieterle           Principal Financial             
                              and Accounting                  
                              Officer and Chairman            
                              of the Board of Directors       

/s/ Jack Everett                                                              
-----------------------       Director                        November 13, 1997
Jack Everett                                                  
                                                              
/s/ Robert Roningen                                                             
-----------------------       Director                        November 13, 1997
Robert Roningen                                               
                                                              
/s/ Horst Scherp                                                              
-----------------------       Director                        November 13, 1997
Horst Scherp                                                  

                                      -9-

<PAGE>


                            SUPPLEMENTAL INFORMATION

Supplemental  Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.


                                              NOT APPLICABLE


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